Will Whole Foods stock Frito-Lay?

“PepsiCo has the resources to acquire smaller brands that are or could more easily be stock at Whole Foods." - Sonia Vora

PepsiCo-owned health-conscious brands, such as Stacy’s and Naked Juice, are currently sold in Whole Foods, and industry analysts believe launching organic snacks could help the snack giant further expand its footprint in this channel.

“I think newer offerings like organic chips may help the firm [PepsiCo] increase the number of channels through which it can sell its products,” said Sonia Vora, equity analyst at Morningstar Research Services.

However, “I think the most significant headwind will be the association of Doritos with unhealthy snack food,” she said.

“Still, PepsiCo’s scale gives it an edge over smaller, often local snack competitors, which could prove advantageous with regards to [the] Whole Foods/Amazon [deal]… PepsiCo has the resources to acquire smaller brands that are or could more easily be stocked at Whole Foods,” she added.

Whole Foods did not immediately respond to whether it would stock Frito-Lay’s new organic snacks.

Better-for-you focus

PepsiCo has been focusing on transforming its snacks into healthier options in the last decade, and the company’s “guilt-free” products currently generate 45% of its net revenue, according to PepsiCo’s Q2 earnings
call.

“These products include diet beverages that contain 70 calories or less per 12-ounce serving and snacks with low levels of sodium and saturated fat,” said Indra Nooyi, PepsiCo’s CEO and chairman.

“We’re actually making progress in Frito-Lay to move the business more to premium products.”

Vora said PepsiCo’s focus on better-for-you products is aligned to the company’s long-term strategy of product innovation and creating healthier, more natural offerings.

“Management has also hinted at steady e-commerce growth, a relatively underpenetrated channel, though these figures are not reported separately,” she said.

“It seems plausible that Amazon is handling a material portion of these e-commerce volumes.”

This content is copyright protected

However, if you would like to share the information in this article, you may use the headline, summary and link below:

These comments have not been moderated.
You are encouraged to participate with comments that are relevant to our news stories. You should not post comments that are abusive, threatening, defamatory, misleading or invasive of privacy. For the full terms and conditions for commenting see clause 7 of our Terms and Conditions ‘Participating in Online Communities’. These terms may be updated from time to time, so please read them before posting a comment.
Any comment that violates these terms may be removed in its entirety as we do not edit comments.
If you wish to complain about a comment please use the "REPORT ABUSE" button or contact the editors.